Even at $173 million sale price, Orioles should prove to be sound investment


August 22, 1993|By JIM HENNEMAN

When the Orioles were sold at auction for a record $173 million, it raised a couple of questions around town.

Is the franchise really worth that much? What is the accepted profit margin on such an investment?

The answer to the first question is easy, but the second can be a little tricky. Yes, the Orioles are worth $173 million -- if for no other reason than the group Peter Angelos put together was willing to pay that much.

It is the second question that arouses the curiosity of fans. Will there be enough left over from the considerable Camden Yards cash flow to keep the team competitive -- and to provide a reasonable return on the investment?

The answers would appear to be yes and yes.

Every time the team has changed hands, the amount of profit has risen. When Edward Bennett Williams bought the Orioles in 1979, his bottom line purchase price was less than $9 million ($12 million less $2 million in assets and $1.25 million profit for that season). With that investment, in those high-yield times, Williams deserved to expect a profit of about $1 million per year.

When Eli Jacobs bought the team in 1989, the price tag had jumped to $70 million. Jacobs, of course, benefited from the Orioles' far greater profit margin. The Orioles made more money than any team in baseball last year, reportedly in the vicinity of $30 million. They are on target to net only slightly less than that this year, with similar prospects for next season.

One thing acquired by the prospective new owners is this year's ledger, which equates to an immediate 16 percent return on the total investment.

It is conceivable that the Orioles could keep making a profit of $30 million per year at least for the next few years, which would make the $173 million deal a sound investment. An estimated $17 million to $19 million in annual concession revenue provides a hefty base for the operation.

The numbers will dwindle when and if the novelty of Camden Yards wears off, but for now they add up to a good deal. There is no guarantee that the Orioles will retain what the auction established as their market value -- that won't be determined until the next time the team is sold.

But only one team has been sold in the past 20 years for less than the previous purchase price. That team, believe it or not, was the New York Yankees, bought by CBS for $10 million and later sold to George Steinbrenner for $9 million.

Phone home

Right-handed pitcher Matt Whiteside apparently had an expensive night on the town in New Orleans. The Rangers, in need of bullpen help, decided to bring the youngster in for last Tuesday's doubleheader against the Yankees, but the lines of communication weren't open.

The field at the University of New Orleans, where the Triple-A club plays its games, does not have a phone. The Rangers were unable to contact anyone from their Oklahoma City farm club, and Whiteside pitched in Monday night's game in New Orleans, making him unavailable for the games Tuesday in Yankee Stadium.

The Rangers were going to wait until they got to Baltimore to add Whiteside to their roster, then had a change of heart and decided to get him in time for the Wednesday afternoon game against the Yankees.

But nobody was able to get in touch with Whiteside until the wee hours Wednesday, by which time the Rangers were exasperated enough to change their minds.

Instead of calling up Whiteside, Texas moved Steve Dreyer from the rotation (to make room for Charlie Leibrandt) to the bullpen.

Well, Leibrandt pitched against the Orioles on Friday and then immediately returned to the DL, opening a spot for Whiteside. He pitched last night against the Orioles at Camden Yards.

The mix-up wound up costing Whiteside three day's pay in the big leagues. Pro-rated at the minimum $109,000, that comes to $633.72 a day, roughly triple what Whiteside makes for three days in Triple-A.

New Orleans can be an expensive town, especially on a minor-league salary, but this was a bit much.

Sosa better than so-so

Larry Himes caught a lot of flak for trading George Bell for Sammy Sosa a year ago, but the Cubs general manager is having the last laugh, because Sosa has become the darling of Wrigley Field.

With 29 home runs and 23 steals, Sosa is on a pace to become the first 30-30 man in Cubs history and has given the Wrigley faithful a reason for hope.

A Moose in Cleveland

For Baltimore fans, the only negative to ex-Oriole Randy Milligan's trade to the Cleveland Indians is that he won't be seen at Camden Yards this season.

The Indians made their last visit here earlier in the month, so Milligan's ex-teammates will have to wait until they visit Cleveland on Sept. 20-22 for a reunion with Moose.

Darwin's evolution

Red Sox right-hander Danny Darwin has done his part to pick up the slack created by Roger Clemens' difficulties. Darwin is 8-1 with a 2.22 ERA in his past 11 starts.

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